Airplane fuselages bound for Boeing’s 737 Max production facility await shipment on rail sidings at their top supplier, Spirit AeroSystems Holdings Inc., in Wichita, Kansas, on Dec. 17, 2019.
Nick Oxford | Reuters
Boeing supplier Spirit AeroSystems will furlough some 700 workers as a strike by machinists at the plane maker enters its sixth week, a spokesman for the supplier said Friday.
More than 32,000 Boeing workers walked off the job Sept. 13 after overwhelmingly rejecting a tentative labor deal with Boeing, deepening the aircraft producer’s financial strain and handing a new challenge to CEO Kelly Ortberg, who took the reins just over two months ago.
The temporary furloughs account for about 5% of Spirit’s U.S. workforce, according to its latest annual filing.
The temporary furloughs will affect employees at Spirit’s largest facilities, in Wichita, Kansas, and account for about 5% of Spirit’s U.S. workforce, according to its latest annual filing. Meanwhile, Boeing and its machinists’ union remain at an impasse, and Spirit is considering deeper cuts.
“If the strike continues beyond November, we will have to implement layoffs and additional furloughs,” Spirit spokesman Joe Buccino told CNBC on Friday.
Ortberg, who faces investors in his first earnings call next Wednesday, last week announced a series of drastic measures meant to slash costs as the company’s losses mount, including cutting the workforce by 10%, or about 17,000 people. Boeing is also ending 767 commercial production when orders are fulfilled in 2027 and said its long-delayed 777X wide-body jet won’t debut until 2026, pushing it back yet another year.
Boeing is in the process of raising debt or equity to increase liquidity.
The roughly 700 Spirit workers affected by the 21-day furlough are assigned to the 777 and 767 programs for Boeing, for which Spirit has built up “significant inventory,” Buccino said. Spirit workers on Boeing’s bestselling 737 Max are not affected, he added. Work on all three programs, however, is stalled because of the strike.
Boeing agreed to acquire Spirit this summer, but the companies don’t expect the deal to close until mid-2025. Reuters earlier reported Spirit’s latest furloughs.